FHA Refinance Calculator: How to Use It

A step-by-step guide to modeling MIP savings, comparing FHA Streamline vs. conventional refinance, and finding your exact break-even month.

By Aesepus Technology  · 

What Makes FHA Refinance Math Different

Most refinance calculators only model the interest rate change. FHA refinances have a second variable that often matters more: Mortgage Insurance Premium (MIP). Borrowers who locked in FHA loans before the March 2023 HUD MIP rate cut are paying 0.85%/year in MIP. Current loans pay 0.55%. That 0.30% gap on a $280,000 balance is $70/month — before counting any rate benefit.

The FHA Refinance Calculator models both layers simultaneously: P&I payment change plus MIP change, combined into a single monthly savings figure with a break-even timeline. For a full breakdown of what closing costs FHA refinances carry, see our FHA Refinance Closing Costs guide.

FHA Streamline refinances do not require an appraisal. If your home's value has dropped since purchase, the Streamline path may still be available to you when a conventional refinance would not be.

How to Use the Calculator: Step by Step

  1. Enter your current loan balance. Use the outstanding principal from your most recent mortgage statement — not the original loan amount.
  2. Enter your current rate and years remaining. Check your original note or monthly statement. "Years remaining" is not your original term — it's how many years are left.
  3. Enter your current annual MIP rate. Check your monthly statement for the MIP line item. Multiply by 12, divide by your balance. Pre-March 2023 loans: likely 0.85%. Post-March 2023: likely 0.55%.
  4. Enter the new rate and term you were quoted. For FHA Streamline, the new term is typically 30 years (resetting the clock). For FHA-to-conventional, enter the conventional quote.
  5. Select "Refinance To." Choose "FHA Loan" to keep MIP at the new 0.55% rate, or "Conventional Loan" to eliminate MIP entirely (only works if your LTV is ≤ 80%).
  6. Enter closing costs. FHA Streamline closing costs typically run $1,500–$5,000. Full FHA or FHA-to-conventional refinances run 2–3% of the loan amount.

The results panel shows your combined monthly savings, a break-even month, and 5- and 10-year net savings figures.

Reading the Results: Three Refinance Paths

Path 1: FHA Streamline (FHA → FHA)

Select "FHA Loan" as the refinance type. The calculator keeps MIP at the rate you enter for the new loan — typically 0.55%. This models a Streamline where you stay FHA but capture a lower rate and possibly a lower MIP if you're still paying 0.85%. Best for: borrowers with less than 20% equity, lower credit scores, or who need the simplified Streamline process.

Path 2: FHA to Conventional (MIP Elimination)

Select "Conventional Loan." The calculator sets new MIP/PMI to $0, reflecting no PMI at 80% LTV or below. This is the highest-upside path — eliminating $128–$200/month of MIP permanently. Check your LTV with our LTV Calculator first; conventional lenders require a new appraisal. Best for: borrowers with at least 20% equity.

Path 3: Full FHA Refinance (Cash-Out or Credit Issues)

A full FHA refinance (not Streamline) requires income verification and appraisal but allows cash-out up to 80% LTV. Use the same "FHA Loan" selection, but budget higher closing costs (~2–3% vs. ~1.5% for Streamline).

Example comparison: $280,000 balance, current rate 7.25%, current MIP 0.85%, new rate 6.50%.
FHA Streamline (new MIP 0.55%): saves $208/month, break-even 20 months.
FHA → Conventional (no MIP, 6.625%): saves $218/month, break-even 22 months.
At 80%+ LTV, the Streamline wins. Below 80% LTV, conventional wins permanently.

Understanding the Break-Even Result

Break-even is the month when cumulative savings exceed closing costs. The calculator computes it as: closing costs ÷ monthly savings. A break-even under 24 months is generally excellent for a Streamline; under 36 months is acceptable for a full refinance.

Break-even resultWhat it means
Under 18 monthsStrong — refinance almost certainly worthwhile
18–36 monthsGood — worthwhile if you plan to stay 3+ years
36–60 monthsMarginal — consider waiting for a better rate
Over 60 monthsUnlikely to pay off — reassess inputs or wait

For a deeper explanation of break-even methodology, see The Refinance Break-Even Point, Explained.

FHA Streamline Requirements to Know Before You Calculate

  • Your current FHA loan must be at least 6 months old with at least 6 on-time payments.
  • No 30-day late payments in the past 6 months; no more than one in the past 12 months.
  • The refinance must provide a net tangible benefit — typically a 5%+ reduction in combined P&I + MIP payment.
  • Maximum cash back at closing: $500.
  • No appraisal required — protects underwater borrowers.

For full eligibility rules, see our FHA Streamline Refinance guide.

Frequently Asked Questions

What does the FHA Refinance Calculator show?
It shows total monthly savings (P&I + MIP combined), break-even timeline, and 5- and 10-year net savings. You can model either staying FHA (with new MIP rate) or switching to conventional (dropping MIP entirely).
What is FHA MIP and why does it affect my refinance math?
FHA MIP is a monthly insurance fee — currently 0.55%/year for most 30-year loans. Unlike conventional PMI, it does not cancel automatically. Switching from an old 0.85% MIP loan can save $70–$100/month from MIP reduction alone, independent of any rate change.
When should I refinance FHA to conventional instead of doing a Streamline?
When your LTV is at or below 80%. At that point, the conventional loan has no PMI, so you eliminate MIP permanently — worth $128–$200/month in most cases. Use the calculator with "Conventional Loan" selected to see the comparison.
Does the FHA Streamline require an appraisal?
No. The Streamline uses the original or most recent appraisal, meaning underwater borrowers can still qualify. This is one of the biggest advantages over a full refinance.
How do I find my current MIP rate to enter in the calculator?
Check your monthly mortgage statement for the MIP line. Multiply that monthly amount by 12, then divide by your current loan balance. Pre-March 2023 FHA loans typically show 0.85%; post-March 2023 loans are typically 0.55% for 30-year terms.

Run Your FHA Refinance Numbers

Enter your current MIP rate, balance, and rate — see exactly how much a Streamline or FHA-to-conventional switch saves you each month.

Open FHA Refinance Calculator → FHA Streamline Guide Check Your LTV

Sources & References